I move: "That Seanad Éireann notes the Minister for Finance's Budgetary Statement."
Budget 2003 paves the way for continued economic success. It is a prudent and cautious budget, which encapsulates the best thinking of the two parties that contributed to its formulation. It is a good budget for the country by several different measures. It sets out to deliver another strong surplus on the current account. This shows that the State's finances are in very good order and that in terms of day to day spending we are managing our affairs very well.
The budget brings public spending under control. Indeed, the people who have been telling us for the last six months that we are spending too much are now beginning to change tack and tell us that we are not spending enough. The budget keeps our national borrowing levels down and puts us up near the top of the European league table for the management of the public finances.
The budget will help to build and maintain confidence in the Irish economy and provide a sound basis for job-creating investment. Some people have tried to whip up talk of a crisis in public finances over the last six months. I reject that suggestion completely and believe that any objective analysis of the situation would bear out that rejection. If people want to know what a crisis looks like they should go back to the 1980s. That was a time when the country nearly went under, not just in terms of Government finances but also in social and economic terms. The 1980s are distant history for the younger generation but they still live in the folk memory of all those who were old enough to take even a passing interest in politics at that time.
It is instructive now to look back at just where we were in those days. One third of tax revenue was going to service interest on our national debt. Up to 90% of income tax receipts went to service the national debt. We were not just failing to pay our way in day to day terms but were running a current budget deficit of up to 8% of national output each year. In the space of just five years, between 1982 and 1987, our national debt actually doubled from €11.7 billion to €23.7, and all of that took place against a backdrop of punitive tax rates on investment, enterprise and work. It is hardly surprising that national confidence effectively evaporated. Mass unemployment and mass emigration were the inevitable consequences of our inability to manage public finances properly.
There is little point now in finger-pointing or indulging in blame games over what happened 20 years ago or more. It is fair to say that both sides of the political divide, as it was then, should shoulder some of the responsibility for what went wrong. The important thing is that we learn from what happened. There are two major lessons from our experiences of that period. First, lose control of current Government spending and you will inevitable lose control of the economy itself. Second, raise taxes to pay for runaway spending and you will destroy the incentive to work, the incentive to invest and the incentive to create jobs.
There has been much talk recently about borrowing and deficits. Listening to some people one would think that the idea of State borrowing for capital spending was some kind of dangerous fiscal heresy. For the last 30 years or so Exchequer deficits have been the norm. Every year the Government would run a deficit on the current account and increase it to fund investment in housing, roads and infrastructure generally. It was only in the mid '90s that we managed to balance our current spending. Even then it was considered quite normal – desirable even – to continue borrowing for capital purposes. Indeed, I am not aware of any commentator who said, at the time, that we should not engage in capital borrowing. It was only in the late 1990s, during the first term of the present coalition, that we reached the enviable position of not just running a current budget surplus but actually running a surplus so big that we did not need to borrow for capital purposes. That was a very fortunate position to be in but, in retrospect, I am not sure how sustainable it was in a liberal democracy, with a dynamic and expanding economy and a fast growing population.
If you go back little more than two years you will recall the kind of criticism to which the Government was open. How can you run massive current budget surpluses when public services need to be improved? How can you run massive surpluses when we need to put money into the health services? How can you run massive surpluses when we need to put huge resources into social welfare? These are all legitimate questions in a democracy. A responsible Government has to operate within certain parameters in a parliamentary democracy, run too big a deficit and rightly be accused of being irresponsible and putting the economy at risk or run too big a surplus and be accused of being uncaring and out of touch with the real needs of the people.
As in all things in life, one rarely gets it exactly right but by and large the Government has got the fiscal and economic balance right over the last six years. The evidence is there to prove it. Full employment did not happen by accident.
The Progressive Democrats have participated in the formation of nine budgets in three different Governments. That is not a bad record for a party which came into being only in the last month of 1985. In fact, we have participated in the drafting of nine of the last 14 budgets. To put that achievement in context, the Labour Party has been involved in five of those 14, while Fine Gael has been involved in just three budgets. The voters have given us the opportunity to bring our distinctive view to bear on the economic management of the country.
All of us in the Progressive Democrats feel privileged and believe that we have used the opportunity well. We have obviously won some converts along the way. We started out as the only party preaching the values of a low tax economy. After 17 years, no party is willing now to campaign seriously for higher taxes to fund their particular political vision.
The economic challenges are very different from those which faced the country in 1985, when our party was formed. They are new and exciting challenges and how we cope with them will determine the success or failure of the country over the next ten to 20 years. I believe every challenge represents an opportunity and that, with a positive outlook, there is no limit to what we can achieve in the years ahead. The motion before the House is that Seanad Éireann notes the Minster for Finance's Budgetary Statement and I add that we also commend the Minister for his and the Government's prudent fiscal management which is the key to sustaining high levels of employment and prosperity in Ireland in the years ahead. I recommend the motion to the House.